From 1 October 2021, rollovers into and out of a Self Managed Super Fund (SMSF) can only be processed via ‘SuperStream’.
What is ‘SuperStream’?
SuperStream is the electronic system used to transfer money and data to super funds. It is used to process employer contributions to APRA-regulated funds and for rollovers between super funds.
The move to include SMSFs in SuperStream rollovers is welcomed by many SMSF fund members who have experienced delays in receiving rollovers into a SMSF. The SuperStream protocols require paying funds to process the rollover of a member’s benefit electronically and within three days of receiving a valid request.
Many SMSFs have mature members who are not anticipating receiving any further rollovers hence, they have paid little attention to the SuperStream requirements. However, if members decide to wind up their SMSF and rollover into a retail fund, they will generally need to register for SuperStream before the SMSF can process the rollover. SuperStream, however, can be activated at any time and can be expected to be established within days.
ASIC’s requirement for a SMSF’s investment strategy to outline an exit strategy may require SMSF trustees to consider SuperStream as part of their next regular investment strategy review.
What is required for an SMSF to be SuperStream ready?
Most professional administrators are SuperStream ready, and many have been using SuperStream to process rollovers for some time. Where a SMSF doesn’t use professional administration services they will need the following:
- An electronic service address (ESA) which is provided by most SMSF software platforms, administrators, tax agents and some third-party suppliers. The ATO provides a list of ESA suppliers on their website – ATO ESA providers.
- A unique bank account recorded with the ATO.
- A Unique Superannuation Identifier (USI) which is the fund’s Australian Business Number (ABN).
Processing a rollover
The paying fund has three days from receiving an actionable rollover request to process the payment. If the rollover request has incomplete information, the trustee of the paying fund must request the required information within three days. Additional time may be allowed if the paying fund needs to sell down assets.
Whilst the prompt receipt of rollovers into SMSFs is welcomed, there may be many practical reasons why a SMSF is not able to action a request to rollover into another fund within the three day timeframe. In the absence of professional administration, it is not always possible to accurately calculate a member’s entitlement within three days. In addition, the sale of assets to make the cash payment may take longer than the time allowed.
Where one member is leaving because of a dispute with another member, further difficulties in meeting the required timeframes may occur.
Another requirement of the SuperStream system is that the trustee of the receiving fund must allocate the rollover to the member’s account within three days of receipt of the funds. For SMSFs without professional administration, a minute regarding the allocation may be required.
SMSFs expecting to receive member benefits rolled over from another fund will need to ensure they are registered for SuperStream prior to the member requesting the rollover. Likewise, registration will be required before a SMSF trustee can rollover a member benefit to another fund.
Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.